Transcript Slide 1
RARE EARTHS, AN UPDATE: A Fresh Look at the
Suppliers, the Buyers
, and the Trade Rules
Keith A. Delaney Executive Director Rare Earth Industry and Technology Association June 9, 2011 Washington, DC
REITA Members
(as of May 31, 2011) Industry RE Resource Companies Academia Now Molycorp Metals
© Rare Earth Industry and Technology Association 2011
Why are we in this predicament?
The Scale of Clean Energy Demand Applications
Traditional Markets i.e. disc drives, personal electronic devices, power tools, etc.
Typical Quantity of RE Oxides per unit
Grams Hybrid and electric vehicles – direct drives and electric assist motors
Kilograms
Integrated Starter/Generator PMG Wind Turbines
Metric Ton
© Rare Earth Industry and Technology Association 2011
Rest of World Demand 1 for REO and the Sources of Supply Increments 2011 - 2015
90 000 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000 0 2011 2012 2013 2014 2015 Supply for ROW (inclusive of average 25k mt China Exports) ROW Demand 1 Kingsnorth, Dudley, presentation to
The Hague Centre for Strategic Studies, January, 2011
© Rare Earth Industry and Technology Association 2011
Clean Energy Buyers’ View
For sustained investment in Clean Energy, OEMs must be assured of
reliable
sources of supply of Rare Earth materials / components / devices at
manageable
prices
4 MW Offshore Wind Turbine
(As long as there is a perceived supply gap, price and availability of REO will continue to remain unstable and problematic to OEM sustained investment)
© Rare Earth Industry and Technology Association 2011 Chevy Volt Chevy Volt
Where Will 2016 – 2020 REO Supply Increments Come From?
Light Rare Earth Resources Heavy Rare Earth Resources Arafura Resources Alkane Resources Rare Element Resources Avalon Rare Metals Toyota/Sojitz/Govt . of Vietnam Great Western Minerals Group
© Rare Earth Industry and Technology Association 2011
Other High Profile RE Resource Project Companies
Heavy Rare Earth Resources Matamec Resources Mitsubishi / Neo Material Technologies Quest Rare Metals Sumitomo / Kazatomprom Toyota/Indian Rare Earths JV Ucore Rare Metals
© Rare Earth Industry and Technology Association 2011
RE Project Companies’ Issues Reliable Supply Manageable Pricing Lack of accurate demand forecasts –
huge error bars.
Limited marketing reach Cost minimization and fixed – variable Adequate development funding to accelerate the 5-12 year process to develop and commercialization process New profitable markets for Ce / La Enough RE properties in the queue so that ROW production capacity tracks with demand
© Rare Earth Industry and Technology Association 2011
Reducing New RE Project Timeline Project Management Lesson: Spend Extra Resources to Save Time While Maintaining Quality Equivalent Importance Time Driven Quality Maintained
Quality Time Resources Quality Time Resources © Rare Earth Industry and Technology Association 2011
Reducing New RE Project Timeline When Resources are Tight
Single Project Companies with limited track records Credit is tight in general – long payback for these investments is problematic Technical talent scarcity?
© Rare Earth Industry and Technology Association 2011
New RE Project Funding / Support Sources
Lending Markets Capital Markets Trading Companies –
Sumitomo example
OEMs –
Toyota, Sojitz and Mitsubishi
Governments
– JOGMEC example © Rare Earth Industry and Technology Association 2011
Two Areas Ripe for Global Collaboration - Extending the Life of RE Resources Recycling of end-of-life products: technologies needed / business opportunities / best practices Manufacturing efficiencies and reduced waste of raw materials at and downstream of RE processers
© Rare Earth Industry and Technology Association 2011
The Process Yield Opportunity in the RE Magnet Supply Chain
Chemical Industry Standard Not Untypical Unit Op 1 Unit Op 2 Unit Op 3 90% 90% 90% Overall Yield 73% 62% 70% 65% 28%
© Rare Earth Industry and Technology Association 2011
What Should OEMs Be Doing?
Understand the vulnerabilities within its individual supply chains. Address vulnerabilities and plan for diversification of supply.
Engage in conversations with RE property developers and the rest of its downstream supply chain. Agree on means to transparently communicate and protect proprietary forecasts of RE requirements
© Rare Earth Industry and Technology Association 2011
What Should OEMs Be Doing?
Demonstrate Commercial Commitment
LOIs Off-take agreements
Loans JVs (Capital sources prefer to see “Demand Pull” as the market driver and not a technology push by suppliers)
Nissan Leaf All-Electric Vehicle © Rare Earth Industry and Technology Association 2011
Tomorrow’s Technology Today
http://www.reitausa.org